13 Feb

'Bunnings could miss key digital opportunities in UK market, expert claims' Victoria Craw, News.com.au

THE doors are open and the sausages are sizzling, but Australian juggernaut Bunnings has a major “blind spot” in its UK plan that could cost the company dearly.

That’s according to Insight DIY manager Steve Collinge who has covered hardware industry trends for two decades. He said despite the Aussie company launching to much fanfare in the UK with novelty sausages and low prices, it has missed a trick by failing to engage in the lucrative UK “click and collect” market that is forecast to double to $487 billion by 2025.

“We’ve been waiting with bated breath to see the first store opening and now it’s very clear that they are copying and pasting what works very successfully in Australia and New Zealand with very little change,” he said having toured the St Albans pilot store on opening day.

He said the antipodean owner had clearly chucked out the soft furnishings and style focus of its predecessor in favour of turning it into a “man cave”. It has also cut prices and embarked on a hiring spree which is going to mean “one heck of a challenge” to provide a return on investment.

“They have a lot of work to do. They’ve got to learn that they can’t just copy and paste what works in Australia and hope that people are going to be queuing up for a sausage sizzle in the rain. It’s one degree in the UK today. It’s a real challenge.”
Bunnings also appears to have “quite a blind spot when it comes to digital opportunity”, he said, citing the fact there is no online shopping available yet and they have eschewed “click and collect”, which is standard practice for major UK stores and allows customers to buy online and pick it up from a designated point.

“They also intend to price match against online players. This is high risk, as you could end up haemorrhaging margin day in, day out. In Australia you can probably do that because you don’t have 200-plus online competitors. The retail landscape is quite different here.”

The comments come ahead of the Grand Opening weekend of the Bunnings pilot store in St Albans, an affluent commuter town around 30 minutes north of London.

Visiting on a wintry Thursday, the revamp appeared a major improvement on the Homebase model with 40 per cent more brands in stock and the number of staff nearly doubled.

The UK version sports features Australians are used to but will prove novel in the UK such as the famous weekend sausage sizzles, in-store playgrounds, cafes, Wi-Fi and ‘how to’ workshops.
Early reaction from locals was positive with Harpenden resident Sue Hobson calling it “absolutely super” while indulging in some light drill shopping.

“I’ve just texted a friend and said I’m in the new Bunnings, you must come in and have a look. I came in for one thing specifically which I found immediately ... then you find lots of other things you didn’t know you wanted,” she said, wheeling pot plants and furniture protectors back to her car.

The verdict was also good from St Albans local Kevin Corbett, only bemoaning the lack of “Australian weather” while filling up his car with storage solutions.

“Homebase had become less DIY builders merchandise, more a cushions and style place where you wouldn’t get a two by two,” he said, adding that the idea of a barbecue outside was “pretty cool”.

The shop has even spawned its own parody Twitter account encouraging people to visit in their “thongs” and claiming President Trump has visited to stock up on “adhesive” for his hair piece.

This week’s grand opening will be crucial for Wesfarmers for clues as to how their $700 million investment could fare. Another store in St Albans will open in April with between four and six planned before June when a decision will be made on how the remaining 250-plus stores will progress.

The changes follow a rapid 12 months in which Bunnings cut the Homebase senior management team and 160 middle managers, axed “zero hour” contracts for staff, embarked on a hiring spree and vowed to pay the living wage to all those over 18 rather than 25 which is the legal requirement in the UK.

Despite the feel-good moves, UK boss PJ Davis has said the company will stick to their core Aussie promises and won’t be doing such “rubbish” as click and collect.

“The most obvious thing is to have products on the shelf and to come and pick them up,” he told The Guardian. “I think click and collect is borne from retailers not being reliable or out of stock.”

St Albans store manager Andy Kenwrick said the transformation had taken three months and they “can’t wait” to get started.

“[The team] have had more than 3000 hours training on everything from timber and key cutting to product knowledge and health and safety,” he said.

Chief Executive of the Australian British Chamber of Commerce David McCredie said the Bunnings takeover could provide insights for future free-trade negotiations in a post-Brexit world.

“They may not all be of this magnitude, but it’s absolutely a key focus for negotiations,” he said.

“Certainly anything that waves the flag of the Australian-British relationship is positive, particularly given the referendum result.”

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Posted in General by hmaclean@britishchamber.com

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